The pros and cons of buying vs. leasing your chiropractic office

By Dale Willerton

Many chiropractors dream of purchasing or constructing their own building or property.

The main reason that dream cannot, or does not, come to be is because more than 95 percent of all commercial, retail, and office space is for lease, not for sale — and it’s that simple.

Many good locations suitable for your chiropractic office, such as strip plazas or street front office spaces, are owned by a landlord who does not want to sell you the property, but rather wants you to be a long-term, paying tenant.

If you could own your own location, would you? Most would probably say yes, but unless you are willing to move from your current leased premises to a lesser location, you may have trouble finding a suitable purchase or construction opportunity.

Decisions, decisions, decisions

Some pros and cons to consider regarding leasing versus purchasing commercial, retail, or office property include:

Pro 1: It is better to pay a mortgage than a lease because you can pay off a mortgage, whereas lease payments continue. More often than not, a monthly mortgage payment is similar in amount to a monthly rent payment.

Pro 2: Equity in your property will increase over time. This does not include the value of the practice, just the real estate, and appreciated value will vary from location to location and city to city.

Pro 3: You don’t have landlord hassles, you feel in control, and can open and close the practice when you want. Yes, ownership is empowering and most of the time it feels great.

Con 1: You might have to sacrifice location strength or desirability as many ownership opportunities are in secondary locations and not on busier streets. If you are moving an existing practice into a secondary location for purchase it’s not so bad because you have loyal patients who will follow you.

Con 2: You would have to move out or away from your current space giving up a well-established location that another chiropractor might lease. Landlords almost always try to replace one industry tenant with another so the possible competition should be a potential concern to you.

Con 3: You may have to become a handyman or deal with various ownership issues such as heating, ventilation and air conditioning

(HVAC) units, building maintenance, etc. that a landlord would have otherwise taken care of for you.

Let’s make a deal!

Sometimes you can negotiate “special deals.” For example: A consultant was negotiating a lease renewal for five chiropractors who were sharing a fairly large office in a small strip plaza. In fact, the chiropractic office occupied about half of the entire plaza.

Even though the landlord did not want to sell this property, the consultant negotiated a First Right to Purchase Option for the chiropractors. With going one step further, the consultant also negotiated the purchase price at the then current market value — even though their purchase option would not likely be used for about five years.

The consultant also put the deal together so that each chiropractor was on the lease independently. This way, one doctor could sell his practice to another new incoming doctor without messing around with the lease agreement each time.

Currently, that building has doubled in value; however, the chiropractors can purchase it for the lesser price the consultant originally negotiated for — and it will be a nice profit on paper for the doctors.

Lasting impressions

Don’t purchase and move your practice into a property for the sake of owning real estate. Only purchase a property for your practice if you would lease it anyway. In other words, don’t resign your practice to a mediocre location just so you can play landlord.

If you want to buy property, there are other residential investments you can explore. If the practice isn’t making money within a few years, you will simply end up selling the property and moving to a better location for lease — probably at a loss.

If you own the property you practice at, one scenario to consider at retirement time could be to sell the practice but retain ownership of the real estate. This will provide a good source of reliable income for a long, long time to come.

Dale Willerton is The Lease Coach, a certified commercial lease consultant and author of Negotiate Your Chiropractic Office Lease or Renewal. Willlerton works exclusively for tenants including chiropractors all across the U.S. and Canada. He can be reached at 800-738-9202, DaleWillerton@TheLeaseCoach.com, or through www.HelpULeaseChiro.com or www.TheLeaseCoach.com